PayPal hit by class-action suit

A class-action lawsuit has been filed against PayPal, days after the company's successful initial public offering.

Filed Wednesday in California Superior Court in Santa Clara County, the suit charges PayPal with illegitimately restricting customers' access to their money. The suit asks for an unspecified amount of damages.

PayPal frequently locks customers' accounts if it suspects that fraud played a part in a transaction, even if the amount in doubt is a fraction of the total amount in an account, said Gail Koff, an attorney and founding partner of Jacoby & Meyers, which filed the lawsuit.

The result is that customers can't accept any more payments via PayPal, pay anyone through the service, or withdraw any of their money until PayPal clears the transaction. That can often take days or even weeks, customers charge.

"Under the guise of needing to protect consumers from fraud, they themselves are guilty of fraudulent abuse of their customers," Koff said.

The suit is only the latest legal trouble to befall the online payments company. A lawsuit alleging patent infringement filed earlier this month forced PayPal to delay its IPO by more than a week. The company is also involved in a patent dispute with Tumbleweed Communications, although that has not gone to the courts.

Meanwhile, Louisiana has asked PayPal to cease offering its service to the state's residents until the company receives a license to transmit money from the state. And state banking regulators in New York, California and Idaho have raised questions about whether PayPal operates an unauthorized banking service.

PayPal customers have repeatedly complained about how the company handles cases of suspected fraud. Several Web sites, including PaypalWarning.com, have been set up to give voice to disaffected PayPal users.

In regulatory documents filed with the Securities and Exchange Commission, PayPal warned that while it had taken steps to reduce fraud, it still incurred "substantial losses" due to merchant and consumer fraud.

During the nine months ended Sept. 30, 2001, for instance, $5.8 million was charged back to PayPal due to customers who disputed purchases with their credit card companies. During that period, the company lost $9.7 million, or about 0.42 percent of the total amount of transactions through its service, due to fraud-related transactions.

PayPal raised more than $70 million in its IPO. The company, which has never posted a profit, lost $18.54 million on sales of $40.4 million in the fourth quarter last year.

How about going after them to recover funds when they submit the wrong method of payment . I was trying to close out a checking account , so I had very little in it . For an ebay purchase , I used Paypal and checked credit cad on file . They used my bank checking account , and I ecrued $50.00 in overdraft fees which they will not do a thing about . I even got the same form letter a couple of times . Don't care for Paypal at all . Wish they would have some major competition !

The exact same thing happened to me. I had provided paypal with my regular checking account and it was agreed that payments were to be made through this account. For some reason they debited my credit union account and caused overdraft fees also. I wish there was a class action suit against pay pal.

wow thats all 50 dollars?.....try 930 dollars in my case someone drained my account and i dont even know if paypal will back it and if they dont...iwill be taking them to small claims court to claim even more than my loss for damages!

It seems this is a recurring theme - they did the same thing to me, but instead of using my CC on file - which I chose as the payment source both in the preferences and on the purchase page - they diverted the charge to the Buyer Credit run by GE Money with exorbitant interest rates. This company charges a regular interest rate that is 9% higher than the penalty rate on my CC.... They first refused to correct this, then reversed the payment altogether, causing some serious issues as the service I was paying for was crucial to my business. That company charged a fee for the chargeback which both Paypal and GE Money refused to accept responsibility for, and to add a little insult to injury GE Money did not credit the chargeback to my account, so now I owe a chargeback fee to my service provider, have had my rates increase due to the chargeback - and GE Money is trying to collect the amount they already recovered. At this point I am being billed for the original amount plus a rate increase plus a chargeback fee by my service provider, GE Money has sent me to collection agency to recover the money they already got back, and my Paypal account is now "unverified" due to the dispute with GE Money so I can't even use it.

In short - if you are thinking about opening a account with Paypal or GE Money - instead just give your wallet to a random crackhead - it will cost you about the same and be a lot less frustrating........

They did that to me as well. I had made my credit card my primary acct because I knew my bank acct was getting low. I had to print 2 shipping labels and they charged my bank acct. Now I'm out 35.00 for each transaction which is 70.00. At the time I printed the labels, paypal was holding 70.00 of my money from sells, and I had a bill me later acct. I have been on the phone with them almost all day and with ebay as well, and ebay owns paypal. I have 3 bids on items so I can't remove them, however I did remove all of my for sale items, and after these 3 sell, I am closing my ebay acct. I can't close my paypal acct because they hold my funds up to 21 days. Paypal owns Bill me later, so I am going to close my bank account and call my credit card in lost or stolen. I can open another bank account and get another credit card, but paypal will not pay me back for the overdraft fees, and my bank will not waive them.

Don't discount Revolution Money Exchange. They're new, they're growing and they at least are backed by a bank. Check them out. It may be early for them to be accepted everywhere but keep them in your radar. Free to sign up, free to use - no fees, and you get $25 for signing up!

Paypal is a horror story. My account has been frozen because a person, who did not buy anything fromme, initiated a item not received claim. The month before this person had paid to my account funds , because they had sold something to me which was no where near their description of the item. So here I sit, I can't pay sellers I owe money to because I have a negative account balance. I have a negative account balance because Paypal withdrew the amount of the so called dispute. How can there be a "not received item dispute" started when the person initiating the dispute did not buy anything from me?

same thing happened to me I paid seller on Jan 17 opened dispute via paypal on the 27 as seller refused and admitted in the dispute to not and would not send my item I was called a scammer etc....yet I was the one out $$ $168.00 to be exact....as she had her 2 pair of Citizens of Humanity jeans and she had my $168.00 *** with this system? I did finally get $$ back but then she went after and I really think Paypal gave her $$ my account was in the red negative all due to 1 dealing with a fraudulent seller as karma would have it her jeans sold again and she got $24 for 1 pair and $31 for the other hahahaha that was Karma I was watching til the end...not that I wished for it but felt these were my daughters birthday gift and I had paid her immediately with instant payment from confirmed &#38; verified account...what a witch seller

Is there a class- action suit going on in missouri? Paypal just took me for alot and I want something done about it. So if any one knows of one or is a lawyer would like to take them on, email me, jennifercountryman@att.net. I sold my kids things under the impression that paypals were going to take legal action against me if I would not do what they wanted! Someone help me for my kids! They are looking at me for answers on why we are broke now, and all I can say is paypal stold from my kids mouth and I want belongs to me, MY MONEY!

Paypal makes a ton of money off of person to person transfers of money on debit cards during fradulant transactions. Lets say you purchase an item off of a classifed such as craigslist, or a user forum like caraudio.com - you pay for the item thru paypal and never recieve the merchandise or it comes broken or not as described. You're screwed. Paypal could care less about you because the transaction was not thru ebay - but they have no problem making money off of you no matter how YOU use their service. So basically, they have no problem with fraudulant transactions as long as they're making money on the transactions that go thru smoothly. So in my opinion, they're just as crooked as the scammer selling fraudulant items.

This TOTALLY happened to me. I purchased items from someone off of craigslist and they were fraudulant. Never sent me my items. I paid via my paypal account, not a credit card. I got 0 back from paypal, but it was "decided in my favor." Right!

I honestly don't have any feelings about this one way or the other. Most of the people I've heard about who have had problems have pretty much caused the problems themselves (like the person above (or is it below?) who had the account tied to an almost empty checking account. Or someone who opens the account and immediately tries to send a lot of money on their first transaction.

I'm not associated with PayPal in any way, nor am I an investor in it. I have been using it personally for many years, and to run my small business since 2005. I have been very happy with their service and their resolution system. I will continue to do business with them for the foreseeable future.

I just thought someone here should make a statement contrary to the rather angry posts that I?ve read here in association with this article.

Well, friend, PayPal can just pull the rug out from under you for no reason at all like they just did to me. I tried to login and I was redirrected to a message that said, "Sorry-your last action could not be completed." No matter what I did, I was locked out of their website and could not even access their Contact info. I had to get their telephone # from a third party web site. Then all I could get was their automated resolution system. I followed the password reset procedure twice and still was blocked out. They have not contacted me with notification of what is wrong and I cannot contact a live person to resolve this. Fortunately, I did not have much of a balance in my PayPal account so my personal losses are minimal. However, my loss in convenience is great. I also would like to join a class action lawsuit against them.

Okay so you are having everything okay with them? Congratulations. You are a very few people who can escape from their fraudulent system. Let me ask you one question? If for no reason they suspended your account, preventing from withdrawing your fund for 6 months, and forbid you not to use Paypal for your entire life, would you still feel great? When you got to that point, you would understand. Now you got no idea how it could go for you

Just wait, your time will come. Paypal is a total and complete joke. Try sending money through a bank transfer. They claim they front the money and that is why they put a hold on funds. The truth is, they pull the money out of your account instantly but put a hold on it for up to 5 days while they make money on your money! It is called floating and they make millions of dollars from it. It is illegal in some cases but they obviously have found a loop hole around it. Paypal is great if you never have an issue with anything, which if you are in business or purchase and sell a lot, it will happen and when it does, forget it, your money is locked up for weeks! They deserve to be sued! And they have been sued in the past and lost big time.

Don't worry... They'll get you at some point. I used PayPal for years with no problem and then one day it started. When I disputed the transactions they froze me up and told me I was a liar. I had to go into my bank and have my account completely changed. I had to dispute the transactions via my bank in order to get my money back. So don't worry... PayPal will get you at some point too and your tune will change.

YOU JUST CONTRADICTED YOURSELF WHEN YOU SAID THAT YOU WERE NOT ASSOCIATED WITH PAYPAL IN ANY WAY ;YET YOU SAY THAT YOU HAVE BEEN USING IT FOR MANY YEARS! WHAT A ******** STATEMENT! SOUNDS LIKE THIS HYPOCRITE IS A ******* PAYPAL SCHILL!!!

Ummm...yeah, okay, whatever. Be sure and let us know when your time comes around and they screw you too. I sold 2 items (spinning wheels from my personal collection) on Ebay months ago. The purchasers paid for the items right away and I've been fighting with Paypal since then to be ALLOWED to withdraw my money out of my Paypal account. As soon as all payment was received for the Ebay auctions and I tried to transfer the funds to my checking account, my Paypal account was immediately placed on hold and the funds "frozen" while they "performed a random fraud investigation". ***??? I have been with Ebay AND Paypal since they each began and had never before had a problem through many, many transactions, until this. Now, each time I contact Paypal trying to resolve this, I either receive an email that makes no sense whatsoever, or I get some lame excuse as to why I cannot withdraw my money. MY money, NOT theirs. They took their part as soon as the auction money went into the account. So, how about you tell me how I've "pretty much caused the problem" myself, since you apparently have some sort of special, God-given insight on this, eh? Luckily I don't have to rely on the money in my Paypal account to pay bills or put food on the table, but some folks do. Some people made their living using Ebay/Paypal and had been doing so successfully for years (as you claim you have), that is, until now. And yet you have the audacity, or would that be idiocy, to get on your self-righteous high horse defending Paypal? Wow.

Your perfectly right till it happens for no apparent reason that is justified, then you will be back here, reading more posts like all the others and along with you, your out numbered by the disputes. Thought Paypal was the ticket, but not anymore, I even have a merchant account, but the way ebay/paypal handle it, if you use it, they won't back you, what a joke. its a monopoly no doubt, its their way or more less no way. The giants need to be taken down and held accountable for their actions.

Paypal has failed me many times. I have been ripped off by a fraudulent seller and paypal will not stand behind me. they facilitate FRAUD, and in fact are PARTNERS IN FRAUD. They have ripped me off when I tried to send money to my Canadian bank in US Dollars. They converted it to CAN dollars even though I stipulated USD, with the conversion fee of course. The bank refused the CAN dollar funds because it was a US dollar account. Then the money goes back into Paypal in CAN dollars and they charge a conversion fee to change it back into US dollars for my purchases. Paypal wins....I LOSE. They refuse to do anything about it. Paypal is a RIPOFF.

Talk about the fox guarding the henhouse. I purchased an exhaust manifold on E-Bay for an early 60's Ford. The action narrative clearly stated no breaks or cracks. When it arrived I sent it immediately to a machine shop to have it prepped for use. They called to say that it was, in fact, cracked. I saw the damage for myself and tried to contact the seller-no reply. I filed for the PayPal buyers protection plan to get my money back by reason that it was not as advertised. In their infinite "wisdom", they came to the conclusion that I had "altered" the item in having it prepped for use, ignoring the fact that you never place a piece like this on a rebuilt motor without some preliminary machine work. As such, they did not have to honor their policy and the seller retained their ill-gotten gains. The good news is that I live in California, within 150 miles of E-Bay Corporate and we have a date in Small Claims to discuss the decision making process of their affiliate, PayPal.

mother_of_two September 5, 2008 We have been members of paypal for years they promise security and protection for their sellers and buyers. I'm sure people are aware that you can use your paypal acc for other purchases. My husband was purchasing some items from China to sell on Ebay and was a litlle leary about the seller since he never did business before. We called PayPal 3 times before we made the purchase and they assured us that if the seller turned out to be a fraud we where insured by them to get our money back. Well we never received our merchandise and paypal will not reinburse we list over 1000.00 dollars they gave us 3.00 dollars back don't know where that came from.They have been investing for 3mths now and when you call they give no explanation to what we where told. They are not a company of their word. I f there is any help for us out there please let me know. Beware

i am also suffered by paypal.i have return the money to the customers because they were not happy with the itemafter all the requirement i have met and no case have filed againest me to paypal,but they still have holding my money.in that case i couldn't pay ebay fee from paypal and ebay has suspended my membership.i would like to file a lawsuit against paypal also.i am in baltimore maryland.

i think we all should look for a lawyer to file a lawsuit aganist paypal.we all will the waitness for eachother.we all are suffering.my ebay membership is closed because of paypal.funny thing is papal holding my money after i have done all the requirement and their are no complain from anybody right now against me.goodluck to every one.

Why has'nt anyone put it together that the fact that Ebay now owns Paypal and they are now demanding that you only accept Paypal is a violation of U.S. anti trust laws! They as of Jan 2009 will not allow a seller to accept the safe standard U.S. postal money order, or a personal or bank check or even cash? who are they to say you cannot accept any form of payment you wish? The auctions belong to the seller, Ebay is mearly a hosting site, a massive server for the auctions. You own the auction!Of course, they are sinking they're own ship, as people who have had tyransactions in the thousands are now leaving. There needs to be competion for Ebay and Paypal, and I believeit is only a matter of time!Remeber the monopoly cable used to have. Satallite service has made cable service have to improve.When I have trouble with my cable compnay, I threaten to get a dish. I get what I want 9x out of 10!Congress needs to not worry of stupidity like steroids in Baseball and sopeona Ebay and Paypal to hearings. Of course that is not as sexy a story as steroids!

I use both Ebay and Pay Pal to earn a little extra cash, but sometimes Pay Pal gets a bit out of hand with the buyer disputes. Did you know that even if shipping insurance is offered and the buyer doesn't pay for it. That buyer can still win a Pay Pal claim, and get their money back. Even if you can prove that the item was lost in the mail, and that the buyer failed to purchase insurance when it was offered. Now I personally haven't lost any significant amounts of money; however, I hear a lot of people asking about bandwagon lawsuits. My advice to them would be not to jump on the bandwagon but to file a lawsuite themselves. All you have to do is contact an attorney in your area and explain your situation and your damages. Some attorneys will say that they won't get involved, but you may find one who is willing to fight against the hypocrisy of Pay Pal. Since, technically Pay Pal defrauds their customers under the gise of fraud protection. I don't understand why some of you claim to have real problems with the poor treatment you recieve from Pay Pal, but none of you, at least no one here has even claimed to have contacted a lawyer. At any rate here is a suggestion: check out
www.lawsuit-lawyers.com and see if any of the links there can lead you to some real legal help. If you dare! I say that because it seems that some of you are scared to speak up for yourselves; unless you have a mob of others standing with you. Or maybe I'm just making things out to be easier than they truly are. So best of luck with all of your Pay Pal problems.

Many of us are just squeaking by, barely able to keep a roof over our heads. None of us has any spare funds to hire a lawyer; not to mention one with enough prowess to go up against a large corporation.

An elephant like PayPal isn't going to pay any attention to one little ant tapping on the elephant's toenail, but a million ants biting it's ears are going to get some results. There's power in numbers and our whole government and economic system is tuned to numbers; large numbers.

Corporations have learned that no one is going to spend tens of thousands of dollars to sue them for filching a few hundred dollars from an individual and they are taking advantage of that at an ever increasing frequency. It is time that our lawmakers give the people some laws that hold the CEO's criminally accountable for their underhanded dealings.

hi, everyone
I believe the two thief paypal and ebay never get enough, they work togeather for stealing money from peoples account. if you call them and want to know the problem why ebay account and paypalaccount is blocked, after long priod of time on line you get stupid answer, untrained employee, I lost so much money and they don't even care, they force you and me to pay to resalve your account but won't do anything , they are not solving problem bettween buyer and seller ,they screw the deal and let the problem rase, I don't understand why goverment won't stop them, if you are seller and sold item and and you recieved the money from buyer if they find buyer is frauds they will force you to pay back the money to them so they don't care even their own paypal policy ,they think you have find item from garbage. if you are buyer and recieve fake item ,like yellow metal instead of gold ,you have to file disput return item register with tracking you may get the money back or not even you get your money, you paid for shipping ,custom and duty fee, and you won't recieve these cost, total headahe, the goverment has to kick them out of business,one thing remember they access to your bank or credit company so they have the power to do anything they want, at the end if you can sell garbage and good garbage seller ,they want you and protect you ,

Hi
I have also problems with PayPal as they have frozen my account with $10.000.00 in it. Even them can not explain why because when I had complains from my customers and offers to pay them back, even though they received puchased order, to get my account back, they still limit my account for 180 days!
I never use my customers money to pay for purchases I sell before they have confirmed receivment and signed for it. Most of my customers has recived, and signed, for orders that I have paid for, and still my account and my money is hold back. I would also like to find a lawyer that is willing to take a case against PayPal, not to gain money but to once and for all make the follow the baking laws as anyone else.

On November 5, 2008, I ordered a work download online and paid through paypal. I never received a confirmation email for my password and username to start my work. I notified the company and after six days and filed a resolution dispute. previously I tried to notify the company with no luck. I was acknowledged by paypal and was given a date of November 19th to place my funds back into my account if there was no response from the selling party. I never receive either. I've just checked paypal and no action has been taken and no response has been issued from either parties and today is the deadline (Nov.19th) that was given to me if no response was given to transfer my money back to my account.

As a seller, I sold a laptop to a winning bidder for $1200. He payed with Paypal. I shipped the item prompty using USPS with tracking confirmed delivery and required signature. I verified the address on the EBay account matched the address on the PayPal account which it did. I corresponded with the user through email tracking information. Well, after a day I had emailed the user his tracking number, Paypal did a reversal of the $1200 from my account. Apparently, someone had fraudulently used this user's account to make a purchase. This fraudulent user supposedly took over the legit user's email, ebay account, and paypal account. The legit user emailed me (from the same email address) that he hopes they catch the person. I got a copy of the signature at the house the laptop was delivered. I filed a police report. I gave all this info to PayPal and thought I had done everything right to be protected by their seller protection policy. Well according to them the address on the PayPal account was unconfirmed and that I was SOL on the money. I called the police in the city of where the laptop was shipped and gave them the info and was told by the detective that they are not in the business of returning stolen property. So they weren't even going to go to the address of where the laptop was shipped and signed for. The police were no help. What was I supposed to do, fly out to the location and beat the laptop out of the person.

This experience has made me very weary of selling anything on ebay and I'm delaying shipping to users which makes them not so happy.

I was one of over 100 people who bought a laptop and paid via paypal. thought I was safe in doing that, but come to find out the seller sold the same exact lap top and three other modles to hundreds of people on all different auction sites. I still have not seen my money neither has anyone else. I found out he actually lived by my mother, and worked in a restraunt in Clearwater Florida. He is in prison after a long fight, but paypal never paid any of the claims.

I have a horror story aboput Paypal and what they did to me. I would like to join this suit. My stoy is a little different. below is a letter sent to paypal: The amount is question is $3995.00

December 10, 2008

To Whom It May Concern:

RE: Auction # 220323373210 &#38; PP-591-946-831

Please be advised that you have three days from today?s date to facilitate the return of my camera from the Dallas, TX police department or I will consider you the new owner of said camera. Please contact Sgt. Acosta of the Dallas PD at 214-671-0905 to release the camera for shipment to me. You have prevented FedEx from picking it up on three separate occasions for no good reason. Should I not receive the camera three days from today?s date, I will consider it sold to you (eBay, Paypal or both). Your complete lack of attention to detail, communication and general common sense has caused this situation. I advised you that I suspected fraud since the package was diverted in the shipping process. I alerted you and you did nothing to stop it. This could have been prevented by one phone call from you to the police to have them delay delivery. I did all the leg work to thwart this fraud and theft, and you have done nothing. Furthermore, it?s unacceptable that email is your only form of communication. I was told by one of your employees that you don?t have phones. I never heard of something so ridiculous. When this amount of money is at stake, I should be able to speak to someone. In any case, whether you purchase the camera (don?t return it in the specified amount of time) or send it back to me, you still owe me for shipping charges from FedEx $49.62 + the balance in my account before you deducted $3995 which was $237.55 for a grand total of $287.17. The $287.17 should be credited back to my account forthwith since you refused the release of the camera to FedEx from the police and the balance in my account at that time. Keep in mind this is time sensitive and I did all of the work to stop this crime from occurring. It is imperative that I hear from you as soon as possible.

Paypal is an absolute JOKE SCAM.My first disaster with this company was about 5 years ago. I had sold a 03-04 topps chrome basketball refractors set to A buyer from canada I dont know if i can say names so i will just say J LUI. Well i sent buyer his set and by accident left out a luke ridnour refractor.Anybody who collects cards would know its pretty much worthless. In the set is lebron james, dwayne wade, carmelo anthony chris bosh etc. Well since the buyer was from canada i could not get tracking numbers. However i did have personal email confirmation from the buyer that they recieved the set minus one card. Well he then decided he was just going to lie and say he did not recieve anything. I had emails and forwarded them topaypal. Howeve they refunded his full payment stating i did not have proof of sending the set. Another transactoin for over 600 dollars for a 2001 topps chrome refractor football set was refunded to fraudulent buyer and when the money was not available out of my account. They debited it for 1100 dollars. Over the past 5 years 5 or more people have had there accounts frozen and funds debited stating that they were linked to me. People such as two of my friends my mother father and sister.Stating that in some way they were connected to me.Locking up way more than even the 1100 they say i owed.Whether it be an address, phone number ebay acc, it didnt matter they woudl just freeze up the accounts. They would not even tell them who they were linked to , the customer service reps would just say you are linked to a hotmail domain.Not giving them any info other than that.The final straw with this company was when my mother in law sold 5000 dollars worth of sports cards.Paypal locked the money up stating that she had not sold items of this monetary value in the past so there fraud department has put the account on lmited. They said that the money would be available for withdrawal in 180 days.They had 5000 dollars for 6 months with no reason . Items were sent to buyer and tracking numbers were provided. So basically they could invest the 5000 dollar for 6 months at the leisure without giving a dollar when she asked to withdraw the money.My sister opened an account years ago and stopped using it. She opned another acc a year ago and then all of a sudden the acc was frozen and paypal stated that she owed 100 dollars from her old account and stated that if she paid they would unlock the account. Well she paid them and then they stated she was linked to me and kept the account locked. So they blackmailed her into paying them 100 dollars. I dont understand how they can tell 10 different people that they all owe 1100 dollars and tell them all they are linked to me. IS that legal. Thats like if i sold a card for 1000 dollars and then they froze the account saying that my grandfather owed them 1000 dollars .You are a part of his family so you owe the money also. Whats funny is when my best friend put some heat on them for locking his account they unlocked it.Since the time of Paypal stealing my money along with my families, he had become a prosector for the county and he knew what to say to them for them to leave him alone. This company is out of control and they think they can do whatever they want because they are a monopoly. Ebay has new rules in place that further monopolize the internet payment options. This company needs to be put in there place.Ebay also needs to be taken care of.

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